Target to drop health policies for part-timers

Ricardo Lopez and Tiffany Hsu

Target Corp. became the latest major company to say it will stop offering healthcare coverage for part-time workers, and experts said it won't be the last.

The Minneapolis company announced in a corporate blog post that it was changing its benefits policy, beginning April 1, partly because part-time employees could probably get cheaper — and in some cases better — coverage through Obamacare.

Moreover, only a small percentage of Target's part-time workforce would be affected by the decision, said Jodee Kozlak, executive vice president of human resources. Less than 10% of its total workforce of about 361,000 are enrolled in the part-time plans.

Target joins a growing list of retailers and restaurants that are making changes to their health benefits as the rollout of President Obama's healthcare law continues. Home Depot Inc. in September said it would drop coverage for part-time workers in January, a change that would affect roughly 5% of its workforce. Walgreens Co. switched its more than 160,000 employees to employer-sponsored coverage through a private health exchange.

Experts predict more employers in industries with large numbers of part-time workers will make similar decisions to keep costs low. Additionally, less skilled workers will be more likely to be steered toward public healthcare marketplaces.

"Employers who employ a lot of unskilled [workers] will more often eliminate benefits," said Robert Laszewki, a healthcare industry consultant. "The employer offering of health insurance will be more and more tied to attracting high-value workers."

Target said its decision may benefit part-time employees if they look for insurance on their own.

"[B]y offering them insurance, we could actually disqualify many of them from being eligible for newly available subsidies that could reduce their overall health insurance expense," Kozlak said in the blog post.

Under the healthcare law, some individuals are eligible for subsidies based on their income as a way to help offset the costs of enrolling for coverage.

Target will assist affected part-time workers by offering a cash payment of $500 to help in the transition, the company said. Target also has hired a firm that will help those workers select plans in healthcare marketplaces, Kozlak said.

Trader Joe's, the Monrovia-based grocery store chain, said in September its part-time workers would benefit if they looked for health insurance through public exchanges. The company, however, said that more than 77% of its employees would be unaffected by the implementation of the Affordable Care Act.

The grocer said it would kick in $500 on Jan. 1 for every part-time employee working more than 15 hours a week while also offering free coverage for basic dental and vision care.

Changes in employer-sponsored benefits were occurring before the implementation of Obamacare.

A report issued this week by the California HealthCare Foundation, for instance, said that in 2010, 69% of U.S. employers offered health insurance, but the rate fell to 57% last year.

Meanwhile, premiums for employer health insurance in California jumped 185% since 2002, more than five times the 33% increase in the state's inflation rate, the foundation said.

As costs keep climbing, many businesses are asking workers to contribute more toward their health insurance or accept fewer benefits. Nearly a quarter of California firms said they increased costs for employees or reduced health benefits last year.

"Most retailers and other employers are looking at oncoming requirements under the Affordable Care Act ... and are making adjustments accordingly," said Neil Trautwein, employee benefits policy counsel at the National Retail Federation. "I think we'll see more of this as we get closer to 2015."

That's the beginning of the mandate that firms with more than 50 full-time employees offer health insurance. That requirement was given a one-year delay late last summer to allow employers more time to prepare.

Trautwein also said it wasn't unusual that so few part-time workers chose to enroll in healthcare plans offered by their employers. Part-time retail workers, for instance, tend to be younger and don't often sign up for health insurance, he said.

Target on Tuesday also announced it was eliminating 475 jobs from its global workforce.

The company's shares closed Wednesday at $58.98, down 22 cents, or 0.37%.